Cuz why would you bother to invest in new plant and machinery when you know that 30 years from now the United States is going to have devolved into a medieval theocracy with dirt roads where there used to be an interstate system?

Why is it necessary to repeat once again what is a consensus position among most economists? Alas there are powerful political interests within the Eurozone that want to foster an alternative narrative, which sees every country like Greece. This erroneous narrative has already done great damage, creating a second recession from excessive fiscal tightening and insufficient monetary easing across the Eurozone.

It is natural at this point to talk about Germany, and the fact that as a result of low wage increases undercutting Eurozone neighbours before the recession, Germany is not suffering as much from this recession as other countries. But I have often tried to avoid stopping there, and instead to ask whether Germany's strange stance on these macro issues simply reflects this different conjunctural position. I think the answer is no.

I'm increasingly drawn to the view that Germany's stance reflects similar political economy pressures as you will find in other OECD economies: there is no German exceptionalism, but rather that the forces that everywhere are pushing austerity and tighter monetary policy happen for various reasons to be stronger in Germany. From this perspective, this post from Frances Coppola is particularly interesting. Perhaps the problem at the heart of the Eurozone is that economic policy advice in Germany has been effectively captured by employers' interests, and perhaps the interests of banks in particular.

Keep it up, Simon! Maybe one day people will listen to reason instead of the banksters. Haha no seriously.

Tuesday, November 24, 2015

New Deal Demoncrat - one long-term indicator changes to yellow. He's worried about mortgage rates. Though to be fair, if rates are still very low compared to the past 50 years, and there's a global savings glut that will keep mortgage rates pinned for decades, then how likely is it really that there is anything to worry about?

FT Alphaville - David Keohane laughs at Izzy Kamizzy. Another story about India's fantastic gold monetization scheme and its one pound take. Hey, why wouldn't you want to earn 2% on gold? Maybe because you're being paid in rupees, and gold is the perfect hedge against rupee currency risk? Anyone living in India is already long rupees by virtue of their location: why would you sell a hedge and go double-long rupees?

Jeffrey Kleintop - India is the fastest growing economy in the world. Unfortunately, with a BA in Business Admin, an MBA and a CFA, he obviously never learned about long-term determinants of productivity, else he would flag in his article that India has a massive infrastructure deficit that is proving impossible to solve. Hey, Jeffy! How does an economy manage to continue growing when it's impossible to move goods?

Mining.com - hedge funds can't exit gold market fast enough. Yay! They dumped 368 tons of gold in the past three weeks and drove the price all the way down to $1065! Go shorter gold, guys! Do it! Dump another 1000 tons! After all, you'll never have to buy it back!

Sunday, November 22, 2015

New Deal Demoncrat - weekly indicators. Broad economic measures look fine, while industrial measures still stink. Which is what you should expect, no? Speaking of which, I wonder if there's an "industrial recession" if measured in quantities of goods instead of in dollars. Is the veil of money getting in the way, here?

Personally, I think the "mismeasurement" thesis is utter bullshit: consumer surplus is entirely theoretical, and if you can't measure it with money then it doesn't exist. And we are measuring it with money in a lot of places: boarding passes on cellphones mean a lower price for providing air flight service. 2015 American medical care (to the extent you're not black) means longer lifespans, higher worker productivity, and more consumption. Price indices don't overstate inflation, they are inflation - the only way they're not is if you've invented some new thing to take the place of money.

Things simply don't happen in economics if there's no money changing hands, Larry. If you reject that, then you're going to have to address the feminist economic critique brought by Marilyn Waring 30 years ago, and we know you won't enjoy that given how much you hate women.